Mary Middleton: She has been caught in a tug-of-war between the bungling council and patient buyers

In April, Mary Middleton put her house in Henley-on-Thames, where she had lived for seven years, up for sale.

With the market in the area booming, the 63 year-old retired accounts manager attracted a bidding war for her three-bedroom terraced house and soon settled on a price she was happy with.

She had bought the house in 2007 and knew that it had once been council owned.

It had been sold under the Right to Buy scheme in 1987 and had passed through several hands since. The owners before Mary had themselves bought the property from private owners in 1998.

The house also sits within the Chilterns, an Area of Outstanding Natural Beauty. This meant the property was subject to a 'restrictive covenant' that places certain conditions on any future sale, despite the fact that the council no longer owns it.

Mary anticipated no issue with the covenant. She remembered the conditions, laid down prior to her own purchase of the house in 2007, well.

At that time she had signed a covenant which meant the property could not be sold without the consent of South Oxfordshire District Council.

The terms laid out in a letter from the council at the time, and seen by This is Money, were clear: whoever buys the house must occupy it as their main residence, must not sell it to a limited company and must not let the property to tenants.

The council is entitled to make the conditions under Section 157 of the Housing Act 1985. The rules are there in part to ensure the area, an attractive part of the country popular with wealthy workers from London looking for a country retreat, did not become overrun with second homes that lay empty for long periods.

Mary was happy to agree to these terms when she bought the house, and paid a £25 admin charge to secure the council's permission.

Jump forward to April this year and she anticipated no problem when her buyers approached the council for the same permission. However, despite being willing to agree to the conditions Mary herself had agreed to, the buyers were denied consent.

The council refused to give permission because the potential buyers did not live or work within a designated catchment area - a catchment area that Mary did not know existed.

The designated area was the Chilterns Area of Outstanding Natural Beauty that fell within South Oxfordshire. Mary's buyers lived one mile outside the boundary.

Mary said: 'Both parties were devastated by the decision, particularly since neither they nor I had any idea that such a restriction could be made. I did not live in the prescribed area when I bought the house, neither did my neighbours when they purchased.'

The council's refusal to give consent had immediate consequences. The buyers' lender – HSBC – was spooked enough by the restriction to withdraw the mortgage facility it had offered.

South Oxfordshire District Council eventually explained that it had reviewed the way it applied the Section 157 restriction since Mary bought her home in 2007. It was now insisting that buyers of homes covered by the restriction be 'local', meaning that they must have lived or worked in the designated catchment area for the previous three years.

Mary was shocked to learn this, not least because she herself had arrived from outside the designated area when she bought the house, and she had not been notified of any change.

WHAT ARE THE NEW RESTRICTIONS?

The original covenant Mary signed was a simple
document, and cost her £25.

A 2007 letter fromSouth Oxfordshire District Council2007 confirmed that Mary had agreed to two restrictions - to not to use
the property as a buy-to-let investment, and not to sell to a private
company.

However, in the background was the s157 rules, which the council did not mention to her when she bought the home.

South Oxfordshire District Councilsays the purpose of the restriction is to stop former
council owned properties being acquired as second or holiday homes in an
attempt to keep them available for local people, as far as that is
possible.

If the buyer of the
property is not a ‘qualifying person’ then the council’s consent is
discretionary.

Overturning the original rejection has enabled Mary to
sell the property – but the new owners, when they come to sell, will
have a limited pool of people to be able to sell it to.

When
it comes to removing the restriction, the council says it has a policy
not to remove it unless there are 'exceptional circumstances.'

It says
pressure on providing housing for local people remains a big issue
within the district.

South Oxfordshire District Council
said the restriction was in place during previous sales of the property
but that, 'since Mrs Middleton purchased the property, the council has
reviewed its processes for dealing with s157 consent applications'.

'As
a result', a spokesman for the council said, 'the process has been made
more consistent, transparent and accessible to applicants by way of an
application form and information sheet on the council's website.

'Since
that review the full requirements of the s157 criteria have been made
clear and have had to be met unless there were exceptional circumstances
justifying granting consent for a sale to a buyer who is not a
"qualifying person".'

South
Oxfordshire District Council added that it was the responsibility of
the purchaser's solicitor to identify the terms of the covenant.

It wasn't only Mary who missed the change of stance by the council. She said a number of former council homes were being advertised for sale without mention of restrictions.She
even approached a local agent when she spotted these properties for
sale who claimed the homes were not affected by the restrictions.

Given
how close Mary's buyers were to the designated area, they fought the
initial decision and were granted permission on appeal.

However,
the initial rejection came at a cost.

After their initial mortgage
offer was withdrawn, the buyers had to stump up a second round of survey
and valuation fees. Mary herself has had to pay thousands of pounds in
legal fees.

What's
more, the buyers chose to resubmit a lower offer for the home, cutting
their initial bid by £20,000. They felt the restriction had made the
purchase difficult and could make the property hard to shift in the
future.

The two sides eventually settled on a price £6,000 under the price previously agreed.

Tough sale: The restrictions mean only those who have lived or worked in the green area of the Chilterns, shown on this map, can potentially buy the home in the future

Mary
has been left angry that such a crucial change in the application of
the rules could be made without directly informing the affected
residents.

Limiting
buyers of her home to those living or working in the designated area has
dramatically cut the number of potential purchasers. Some 100,000
people live in the Chilterns, but five times this number live within three
kilometers of its borders.

Mary
has applied to have the covenant removed completely six weeks ago, something that can
be done with the agreement of the council under 'exceptional circumstances'. Various deadlines by which the
council had promised to make a decision have passed with no news.

Mary adds: ‘The damage caused to my health by the council's long, drawn out dithering and inability to make a common-sense decision is more important than money, so I've accepted a price cut to get rid of the house.

‘If there ever is a positive decision, it will be the new owners who benefit, and not me - it's hard to swallow such blatant injustice.’

HAVE YOU HAD A COUNCIL BLOCK?Do you live in an ex-council home? Have you had troubles buying or selling after restriction goalposts had been moved by the council. Please get in touch: lee.boyce@thisismoney.co.uk